Types Of People You Should Not Take Investment Advice From

While you might not be entirely sure which advice is good and which isn’t, you can bet that there are certain people you shouldn’t even be listening to in the first place.

Everybody has an opinion. We have opinions on things that spark our interests, things that don’t, things that matter, and even things that are grossly irrelevant. These opinions are formed structurally overtime based on our experiences, background, level of education, and wisdom garnered from reputable sources.

However, they are also formed informally as a result of our biases, something we heard, a borrowed perception or ideology from somebody we know, and so on. As such, when it comes to making important decisions like investing, one has to be careful in deciphering what is an important metric and what isn’t.

It also helps to determine which information source is valid and which should be tossed out of the window. Now, it is natural to want to bounce ideas off another person’s head. But where the validation of your decision is from an individual having an opinion, you are at a risk of taking mere assumptions as truth.

While you might not be entirely sure which advice is good and which isn’t, you can bet that there are certain people you shouldn’t even be listening to in the first place.

People who don’t invest

As apparent as this may seem, it is easy to forget. No matter how many times an individual watches a football match, he would never be as good a player as an actual player.

Taking advice from somebody who doesn’t invest as as simple as taking health advice from a friend as opposed to a medical practitioner - it goes wrong most of the time. Your wise uncle might know a lot about many things, but if he’s not an investor himself, take his advices with levity.

People who gamble

These people are the big talkers who can make illegal Ponzi schemes sound as brilliant as motivational messages. The gambler throws caution to the wind. The gambler takes risks that are completely baseless.

You can easily tell who the gamblers are with their usual promises of amazing returns and little or no risk. Listening to them is tantamount to basing your hope on mere luck. The investment world is not a playground for chance.

People who always give the same investment advice

There are two kinds of people that fall under this category. The first are those who have a stake in your decision or are selling something to you. Think some real estate agents or insurance brokers, for example.

Their goal is to sell and they would do anything and say anything to ensure that you cave in. This person has no regard for your personal investment objective, your risk tolerance and the likes. As such, they can only offer merely generic advices.

The other kind of person that would offer you generic advice are those who are biased based on their experiences. It is as simple as having a parent who wants you to study accounting because he or she did so and has identified that as the only great career path.

In the same vein, it is normal to find individuals who want you to invest in a specific industry or in a specific investment vehicle because they don’t know any better than that. Don’t fall for it.

The “get rich fast” people

Investment is not for the desperate. It’s not for the people who want to become overnight successes either. This person might mean no harm in that he or she just wants you to be successful at the shortest possible time.

As such, their advices would not likely be tied to delayed gratification. The worst of this kind are those who are offering you fast deals. Those deals that are only valid for short periods of time. When an investment is not directly linked to your objectives, it is most probably a mistake you can avoid making - no matter what anybody tells you.

People you don’t understand

The essence of communication is to pass information. Where that has not taken place at the very basic level, communication has not taken place. It is easy to find so many finance jargon flying around.

Beware of people who speak finance language you don’t understand and do not be caught up in the idea of them being experts or knowing more because of this complication. An individual who cannot explain something at the very basic level, most probably doesn’t know it.

It is important to add here that even actual experts are capable of providing biased information. It is also important to note that even accurate information might not stand where market dynamics are concerned.

The best advice anybody can give you is that it is important to make investment decisions based on your investment strategy and your objectives. Only that would serve you in the long run.

Written by Lawretta Egba.